An inquiry into the nature and causes of the wealth of

96

The Wealth of Nations

not raise the wages of labour in any employment. It is otherwise

with those in which courage and address can be of no avail. In

trades which are known to be very unwholesome, the wages of

labour are always remarkably high. Unwholesomeness is a species

of disagreeableness, and its effects upon the wages of labour are to

be ranked under that general head.

In all the different employments of stock, the ordinary rate of

profit varies more or less with the certainty or uncertainty of the

returns. These are, in general, less uncertain in the inland than in

the foreign trade, and in some branches of foreign trade than in

others; in the trade to North America, for example, than in that to

Jamaica. The ordinary rate of profit always rises more or less with

the risk. it does not, however, seem to rise in proportion to it, or so

as to compensate it completely. Bankruptcies are most frequent in

the most hazardous trades. The most hazardous of all trades, that of

a smuggler, though, when the adventure succeeds, it is likewise the

most profitable, is the infallible road to bankruptcy. The presump-

tuous hope of success seems to act here as upon all other occasions,

and to entice so many adventurers into those hazardous trades, that

their competition reduces the profit below what is sufficient to com-

pensate the risk. To compensate it completely, the common returns

ought, over and above the ordinary profits of stock, not only to

make up for all occasional losses, but to afford a surplus profit to the

adventurers, of the same nature with the profit of insurers. But if

the common returns were sufficient for all this, bankruptcies would

not be more frequent in these than in other trades.

Of the five circumstances, therefore, which vary the wages of

labour, two only affect the profits of stock; the agreeableness or

disagreeableness of the business, and the risk or security with which

it is attended. In point of agreeableness or disagreeableness, there

is little or no difference in the far greater part of the different

employments of stock, but a great deal in those of labour; and the

ordinary profit of stock, though it rises with the risk, does not

always seem to rise in proportion to it. It should follow from all

this, that, in the same society or neighbourhood, the average and

ordinary rates of profit in the different employments of stock should

be more nearly upon a level than the pecuniary wages of the dif-

ferent sorts of labour.

They are so accordingly. The difference between the earnings of

a common labourer and those of a well employed lawyer or physi-

cian, is evidently much greater than that between the ordinary

profits in any two different branches of trade. The apparent dif-

ference, besides, in the profits of different trades, is generally a

deception arising from our not always distinguishing what ought

to be considered as wages, from what ought to be considered as

profit.

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97

Adam Smith

Apothecaries’ profit is become a bye-word, denoting something

uncommonly extravagant. This great apparent profit, however, is

frequently no more than the reasonable wages of labour. The skill

of an apothecary is a much nicer and more delicate matter than

that of any artificer whatever; and the trust which is reposed in

him is of much greater importance. He is the physician of the

poor in all cases, and of the rich when the distress or danger is not

very great. His reward, therefore, ought to be suitable to his skill

and his trust; and it arises generally from the price at which he

sells his drugs. But the whole drugs which the best employed apoth-

ecary in a large market-town, will sell in a year, may not perhaps

cost him above thirty or forty pounds. Though he should sell them,

therefore, for three or four hundred, or at a thousand per cent.

profit, this may frequently be no more than the reasonable wages

of his labour, charged, in the only way in which he can charge

them, upon the price of his drugs. The greater part of the appar-

ent profit is real wages disguised in the garb of profit.

In a small sea-port town, a little grocer will make forty or fifty

per cent. upon a stock of a single hundred pounds, while a consid-

erable wholesale merchant in the same place will scarce make eight

or ten per cent. upon a stock of ten thousand. The trade of the

grocer may be necessary for the conveniency of the inhabitants,

and the narrowness of the market may not admit the employment

of a larger capital in the business. The man, however, must not

only live by his trade, but live by it suitably to the qualifications

which it requires. Besides possessing a little capital, he must be

able to read, write, and account and must be a tolerable judge,

too, of perhaps fifty or sixty different sorts of goods, their prices,

qualities, and the markets where they are to be had cheapest. He

must have all the knowledge, in short, that is necessary for a great

merchant, which nothing hinders him from becoming but the

want of a sufficient capital. Thirty or forty pounds a year cannot

be considered as too great a recompence for the labour of a person

so accomplished. Deduct this from the seemingly great profits of

his capital, and little more will remain, perhaps, than the ordinary

profits of stock. The greater part of the apparent profit is, in this

case too, real wages.

The difference between the apparent profit of the retail and that

of the wholesale trade, is much less in the capital than in small

towns and country villages. Where ten thousand pounds can be

employed in the grocery trade, the wages of the grocer’s labour

must be a very trifling addition to the real profits of so great a

stock. The apparent profits of the wealthy retailer, therefore, are

there more nearly upon a level with those of the wholesale mer-

chant. It is upon this account that goods sold by retail are gener-

ally as cheap, and frequently much cheaper, in the capital than in

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